Renegotiating the value of a museum

Over the past couple of weeks quite a few people have weighed in on the Detroit Institute of Art’s successful appeal to three counties in Michigan to pass a “millage” (a property tax) which would provide $23 million per year for the museum (91% of its budget) over ten years, while it raises $400 million for its endowment to replace the tax revenues when they run out. One of the most interesting aspects of this strategy is that the DIA offered free admission to the museum only to people living in the counties that passed the levy (which equates to approximately $20 per year tax on a home with a market value of $200,000 and a taxable value of $100,000) and threatened to shut down galleries and close the museum on weekdays if the levy did not pass. If you have not been following the story, on August 7th the levy was passed in all three counties. Despite my instinct to be cautiously optimistic, I find myself mulling over this case and wondering whether it is the hands-down financial and moral victory that it seems to be on the surface.

For background and more details about the plan read an excellent overview by Judity Dobrzynski and also one by Mark Stryker. Additionally, Lee Rosenbaum (Culturegrrrl) has written a thoughtful post reflecting on the circumstances at the DIA and her perspective that it was (perhaps uniquely) well positioned to pull of such a feat and deserving of the public support. Terry Teachout astutely assessed the keys to DIA’s success, framing them as good lessons for other arts organizations in trouble. Likewise, Benjamin Genocchio examined the financial crises at DIA and LA MOCA to exhume strategies for other art museums on the brink. And one blogger asked (without much elaboration) whether DIA’s rescue can serve as a model for others.

From everything I have read about the executive director of the DIA, Graham W.J. Beal, he appears to be a very smart and capable leader. The word heroic came to mind several times as I was perusing articles about his tenure at the DIA and what he has accomplished. And I am sincerely impressed by the successful passing of the millage—it was a bold solution to a long-term structural deficit, it was executed responsibly and well, and the favorable response from the community (I presume, though I could be wrong) would seem to represent sizeable goodwill towards the institution, respect for its collection and trust in its management, or value for the arts in general.

Having said this, I have some questions:

First, I wonder what the annual net gain of this millage is estimated to be once possible reductions in contibutions, memberships and admissions are considered? I notice that the membership fees (for individuals and families) on the DIA’s Website are pretty steep relative to the $20 per year per household tax assessment: $60 for Senior Citizens; $65 Individual; $80 Companion; and $110 Family Plus. In 2009, DIA had membership revenues of nearly $4 million. Is there a risk that some (many?) of its current members will now feel that they have “already paid” and will not renew their memberships, or that the tax will crowd out future membership growth? Additionally, the DIA shows another $2 million in admission fees on its 990, some percentage of which one estimates could be lost because of the tax. Finally, it’s not unreasonable to think that some donors may now consider the DIA to be safely harbored with its millage and may reduce their contributions or choose to redirect to other organizations that do not have the heft to win such a tax.

Second, I am more familiar with such taxes being passed to support a range of nonprofit institutions, sometimes in the arts or sometimes across sectors. While I understand that a proposed tax to support 17 institutions in Detroit failed some years earlier (some suspect because it was too high), I wonder whether a tax to support a range of institutions in Detroit might have been a smarter and more ethical solution in the long run? For one, I have begun to worry that large investments in large institutions can come at the expense of the health and vitality of (arts) communities as a whole. For another, I am skeptical that many individual organizations could actually pull off this sort of feat. I agree with Lee Rosenbaum that when you read DIA’s history and track record in recent years it seems to be both deserving and well positioned for this reprieve. Could any other arts organization in Detroit successfully undertake anytime soon a similar effort now that DIA has gone this route? Is this a strategy that favors first movers only? Is it really the model that some seem to think it is?

Third, is the DIA setting itself up for an awkward renegotiation of its relationship to its community when the levy ends? Imagine a scenario ten years from now in which DIA has been unable to raise the $400 million in its endowment—a scenario that seems quite possible given the extraordinary ambition of the goal, the poor financial condition of the city, and the tremendous competition for contributions since many public services have been cutback and many nonprofits are struggling to stay afloat. DIA has already said it will not try to get the tax renewed. If it is not as flush as it hopes to be in ten years will it be forced to cut services and institute admission fees again? And will community members that have been going for free be willing to pay?

Fourth, what motivated people to pass the tax? As I understand it, the millage was not expected to be a slam dunk in all three counties. Was it civic pride and sincere appreciation for the institution/art? Competition among the counties? A logical reasoning that $20 per year to gain free admission for one’s entire household to a public museum that normally charges $4-$8 per ticket is a good deal? I wonder whether there is something we can learn from better understanding what motivated people to vote “yes” – and also how those who may have voted “no” are now feeling about the museum? Resentful because they feel that education, pubic safety and health and human services should be prioritized over art (as more than a few comments by readers of the Detroit Free Press seemed to suggest)? Or perhaps more inclined to attend and take advantage of the resource?

Fifth, what are we to make of the tripling of attendance in the week after the millage was passed? Is this a sign that even a $4 to $8 admission fee (the range of prices listed on the DIA Website) is a barrier for many, many people? That people wanted to “get their due”, or perhaps felt a newfound sense of “ownership”? That people wanted to “celebrate” the millage? I wonder if the DIA or anyone else has polled these visitors to try to determine how the millage may already be affecting people’s perceptions of the museum and their relationship to it.

Finally, and perhaps most of all, I am intrigued by DIA’s quid pro quo deal with its community. I wonder whether DIA has set a precedent that may begin to recalibrate the perceived relationship between nonprofit arts organizations and their communities and the expected ROI from future investments in the arts. This seemed to be the argument underpinning the DIA strategy: Those arts institutions that want their communities to step up and support them will need to put more than the importance of art, quality of life, and general econmic impact on the table – the people expect and deserve a tangible private benefit in return for sharing some of their hard-earned wages. And, likewise, communities that do not demonstrate support for the arts can no longer expect to receive the same levels of service or access as those that do.

Was this simply the new deal between the DIA and its community? Or does this represent a new line in the sand … a raising of the bar for all of us in the arts?

I admit to knowing only what I’ve been able to glean from newspaper accounts and blogs. I heartily welcome information and perspectives from others on these issues. in the meantime, I offer congratulations to the DIA and the greater Detroit metropolitan area for the win. It is a vote of confidence in the arts, which has clearly been heartening to many.

PS – Many thanks to all who have continued to post comments on my last three posts. I am heartened by the terrific conversation/debate. I do expect to return to some of these issues in the future.

Comments

Excellent dive into a lot of unresolved questions, Diane. We (WDET) have covered this quite a bit and I’m sure this is something we can drill down at Salzburg. In between, here is the archive of DIA coverage (http://wdet.org/search/?q=DIA) and I’m happy to connect you with my editorial team if you want to probe some of these questions with local reporters.

I was raised in Detroit and my mother (a visual artist) took us to the DIA every Saturday after our ballet and violin lessons. She supported the millage for the DIA. She still goes often and sees art films there. In a city that has suffered so much negativity, the DIA is still an excellent institution and it remains relevant to city dwellers and suburbanites alike.

When I visited Detroit with my children over the years (I live in Rochester, New York and visit NYC often), I made sure that I took my children to Greenfield Village, the Henry Ford Museum and DIA. I went to the Diego Rivera exhibition at MOMA last fall and it was terrific, but it did not have the imapct on me that his (Rivera’s) mural does at DIA – especially given its connection to the auto industry and city. With the 99% versus 1% conversations – it is as relevant today as when he painted it early last century.

I am involved in arts administration today – struggling with tremendous paradigm shifts in the field. Relevance. Relationships to broader community. Who funds what. I think that the DIA, despite the fact that it is an institution that was established in the last century, has value to the citizenry. And the fact that city residents and suburabnites alike in Detroit agree on that – with the great recession even worse there than in much of the country – speaks to its relevance.

Great to see that local people have voted directly to support an arts organisation with their taxes.. I wonder how many other communities would choose to do that when faced with many other calls for their tax money in difficult times. DIA must have gone a great job in communication! Presumably this could only work with one arts organisation in one area – or can we really think that a theatre, gallery, dance company, orchestra, youth theatre etc. could all benefit from ‘millage’? (I think in the UK we would call this hypothecation and I am not sure it is actually possible).

For me it raises again the big issue behind all the changes we are seeing in funding models – how do arts organisations relate to their communities and how to they demonstrate the value they bring to those communities.

Your post encouraged me to look more deeply at the public comments on the Detroit Free Press articles you cited. It is really interesting to see what arguments people made for and against the millage, and how they debated the issue. It’s rare to see a highly energized focus group (granted, a sometimes extreme one) that really reflects both users and non-users of traditional arts institutions.

The City of Detroit owns the DIA collection, so it effectively has a multi-billion dollar financial reserve. Art finance innovations are emerging that would let Detroit’s artworks serve as a store of value as they hang on DIA walls. This means they can generate cash income from a Detroit Arts Endowment dedicated first to funding the arts and then to helping fund other municipal priorities. Since each billion dollars in a cash endowment conservatively generates $25 million to $50 million annually in perpetuity, the DIA collection could likely generate hundreds of millions of dollars a year in perpetuity. Given Detroit’s multitude of needs and its already-high tax rates, letting artworks fund the arts and more made far more sense than raising current tax rates. Taxpayers have already made their investment in assembling the DIA collection, and if that investment starts generating cash returns to support its cultural returns, that fact will encourage far more arts investments going forward. Regional tax schemes, not so much.

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[…] $23 million annually for the DIA over the tax’s 10-year duration. There are charitable and less charitable ways to interpret this development, and arts world response seemed to be divided between them. On […]

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Diane Ragsdale

Diane is currently attending Erasmus University in Rotterdam (in the Netherlands), where she is researching the evolution in the relationship between US nonprofit theaters and Broadway and working towards a PhD in cultural economics. Read More…

Jumper

About 20 years ago, when I was in graduate school, I came across the following poem:
When an old pond
gets a new frog
it’s a new pond.
I think the inverse also may be true.
I’ve often been the new frog jumping into an old pond. Since 1988, I’ve worked in the arts in the US in various roles … [Read More...]

If you want a quicker read, then you may want to skip the speeches and opt for the article, "Recreating Fine Arts Institutions," which was published in the November 2009 Stanford Social Innovation Review.

Here is a recent essay commissioned by the Royal Society for the Encouragement of the Arts for the 2011 State of the Arts Conference in London, "Rethinking Cultural Philanthropy".

In 2012 I documented a meeting among commercial theater producers and nonprofit theater directors to discuss partnerships between the two sectors in the development of new theatrical work, which is published by HowlRound. You can get a copy of this report, "In the Intersection," on the HowlRound Website. Finally, last year I also had essays published in Doug Borwick's book, Building Communities Not Audiences and Theatre Bay Area's book (edited by Clay Lord), Counting New Beans.